How to Receive Free Cruise Vacations for the Rest of Your Life

I have discovered a low-risk method for taking a free cruise vacation for two people every year for the rest of your life.  You don't have to sit through a timeshare presentation to receive it, and this is not a mystery shop.  Anyone can do it, and while it does require you to tie up a decent sum of money, the funds remain in an account you own and control.

Since the only cruise line I have used is Carnival, my plan will focus on how to take a free Carnival cruise every year for  life.  The great part about my plan is its flexibility, as it can work for many budgets, and the  risk involved is relatively low.  Here's how it works:

• Carnival Cruise Lines (NYSE: CCL) is a publicly traded company.  This means you can open a brokerage account at any company and then buy shares of stock in Carnival.  I use E*Trade, but my plan is brokerage company-agnostic.  You need to have a brokerage account somewhere.
• Currently, CCL pays an annual dividend of $1 per share.  It is paid quarterly, $.25 per share per quarter.  My plan is simple:  purchase enough shares of CCL so that the dividends you receive are enough to pay for your cruise.
• Carnival offers a sweet bonus for shareholders:  depending the length of your cruise, Carnival will provide you onboard credit ranging from $50-$250 for every cruise you take as a shareholder, as long as you own at least 100 shares of CCL.

Here's how I plan to take advantage of this:

• I will purchase 1,000 shares of Carnival.  Right now shares are around $34 each, so I have to tie up $34,000 in order to make this work.  Based on the current dividend, I will receive $1,000 per year in dividend checks that I can use for my free cruise.
• To keep things convenient, let's say I book a 5 day cruise from my home port of Tampa.  Since I'm always out for a deal and can be flexible with dates, I may choose a 5 day Western Caribbean that departs Saturday, 9/21/13 and costs $249/person for an inside cabin.  After taxes and fees, the cost for two people is $621.82.  There is currently a sale on the site where I also receive a $50 onboard credit.  Add to that a second $50 onboard credit for my shareholder benefit, and I now have $100 to spend while onboard.  I will allocate that to gratuities.
• I decide to splurge a bit and bring an extra $200 to spend during our cruise.  My total cost for this 5 day cruise is now $821.82.  It is completely paid for by the dividend checks I have received over the last year.  I will bank $179.18 ($1,000 less $821.82), which can be used to pay taxes, to apply toward my next cruise or to buy more shares of stock, thereby increasing the dividends I receive in the future.

Of course, there are risks involved and other factors I should consider:

• I have to pay taxes on the dividends I receive, so I should plan to spend somewhat less on the actual cruise if I want to have enough left over to pay Uncle Sam.
• Carnival might discontinue or reduce the dividend.  There's no getting around the fact that the company has had more than its share of problems lately.  These problems cost money to fix.  One way I can mitigate this risk is by starting out taking cheaper cruises and banking the leftover dividends for future cruises, or even using the leftover cash to buy more shares of stock.
• The cost of taking a cruise will probably go up over time.  Of course, one may also argue that the dividends paid should also increase over the long term, so I think it is reasonable to expect my increasing dividend checks to pace the increased cost of inflation.  
• Carnival shares could lose value.  Of course they could, or they might go up.  Over time, companies usually increase in value.  I will always own the same number of shares, but if I decide one day that I don't want to take free cruises anymore, I might lose money when I sell my shares.  Or, I might make money.

Although there are some risks involved with this strategy, I believe these risks are minimal.  Since you own the stock you buy, you can always sell later if circumstances change.   The plan is flexible, too.  Maybe you don't have $34,000 to tie up in the stock market, or maybe you don't want to take a cruise every single year.  Adjust your investment accordingly.  For example, there is a 4 night cruise out of Port Canaveral for $484.66.  I might start out with plans to only cruise every other year and not spend any money during the cruise.  I can purchase 250 shares of stock for about $8,500 and will have about $500 to spend every other year.  I can always increase my ownership later on.

My Frugal Miser - April Expense: $3,858

I spent more in April than I should have.  A big part of the added expense was the four new tires I bought for my grandfather's truck.  I also did not do enough gas station mystery shops to offset my driving.  I paid for an investing conference I will be attending in November ($295).  Finally, I spent more on food, entertainment, and clothing than I normally do.

My goal for May is to keep my personal expenses under $1,500.  Since I am attending the Berkshire Hathaway meeting in Omaha this weekend, my travel expenses are going to make this a tough goal to keep.

April Personal Expenses ($2,291)

$531 Auto ($319 for tires, $50 for four filters, $162 for fuel)

$0 Bank Fees
$72 Clothing
$197 Entertainment (movies, gambling, alcohol)
$247 Food
$74 Gifts Given

$551 Household/Housing/Home Repair
$159 Health and Dental Insurance
$338 Investment Expenses

$0 Medical/Dental
$0 Miscellaneous
$31 Personal Care

$0 Subscriptions
$0 Taxes

$23 Utilities
$68 Vacation and Recreation

April Business Expenses ($1,567)

$1056 Mortgage Interest (rental properties)
$123 Interest on Debt (not including Mortgage Interest)
$388 Rental Properties - Maintenance and Repairs


Total April Expenses : $3,858

Notes

• I don't include principal payments in my expenses, only the interest portion of the monthly mortgage bills.
• I expect Auto Service expense to continue to be high, but it is still lower than the cost of acquiring a new car.  In April I bought new tires for my grandfather's truck.  I also bought new air filters for both cars and a cabin air filter for the Corolla.

My Frugal Miser - April Income: $10,556

April was a strong month on the income side of the ledger.  My deadbeat tenant occupied the townhouse the entire month, so I had to file an unlawful detainer with the county.  I am optimistic that he will be gone in the next week or so.  Once a new tenant is found, I will have even more rental income.  I did very little mystery shopping in the second half of the month.  There is some intense competition in the Tampa Bay area for mystery shopping and I refuse to work for the paltry sums others are taking... that's supply and demand in action, folks.  Of course, most shops are paid the month after they are done, so the income I am reporting, which was significant, is primarily from work I did in March.


April Income

$3,150 Mystery Shopping
$7,361 Rental Income

$46 Other Sources

$10,556 Total Income for April

Notes:.  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.
• I include merchandising and hospitality work in the mystery shopping category since the companies that I shop for provide this extra side work. 

How I Save Money by Watching YouTube

One of the most effective ways to keep money in your pocket is by doing tasks yourself rather than hiring someone else to do them.  I will never understand how an able bodied person can justify hiring maids for house cleaning or a lawn service to maintain one's yard.  Beyond making this a financial calculation (some people argue their time is too valuable to focus on menial tasks like this), one should consider the benefit of the exercise you are receiving.  It cracks me up to see someone pay $70 a month for a gym membership and then pay Merry Maids $150 to clean their house.  Cancel the gym and get your workout at home while you make your bathroom sparkle!

Then there is that gray area:  hiring out services due to ignorance or inability.  Most people, myself included, will hire roofers to replace their shingles.  The truth is, the work itself isn't rocket science, but I'm scared to death of falling off the steep, second story roofs at my townhouses.  Car repairs are another common area we Americans love to farm out to professionals.

Years ago I discovered that Youtube has how-to videos on just about everything.  A recent example:  Having never changed my cabin air filter in the Corolla, I was appalled by the $50 my local chain store mechanic wanted, even after he showed me how filthy the filter was.  This morning I found a video that, in less than 90 seconds, showed me exactly how to change the filter.  Using a coupon from Facebook, I visited my local Auto Zone and picked up the filter.  The filter was $14.99, plus I saved 20% with my coupon (technically I saved $10 off my $50 purchase, as I bought a few other parts while there), so my new cabin filter only cost me $12.  Replacing the filter took me under one minute.  Seriously.

For sacrificing one minute of my precious time, I saved $38.

Here are a few other easy repairs I have learned to do, as well as the estimated do-it-yourself savings:

• I learned to replace the capacitor in an air conditioner.  It's one of the most common parts to fail during warm weather months.  DIY Cost:  $10, 30 minutes; Pro Cost:  $150-$200
• Replace Your Car's Air Filter.  DIY Cost:  $15, 2 minutes; Pro Cost: $20
• Change a Blown Bulb in Your Car.  DIY Cost:  $10, 15 minutes; Pro Cost:  $60
• Coil Cleaning outside HVAC unit.  DIY Cost:  $10, 20 minutes; Pro Cost:  $120
• Replace an Electrical Outlet.  DIY Cost:  $5, 5 minutes; Pro Cost:  $75
• Replace a Toilet:  DIY Cost:  $75, 45 minutes; Pro Cost:  $250
• Install new Light Fixture:  DIY Cost:  $10-$50, 15 minutes; Pro Cost:  $85-$125
• Replace a Shower Diverter:  DIY Cost:  $10, 10 minutes; Pro Cost:  $75

I could go on and one.  It is easy and convenient to hire someone to do it for you.  And the truth is, sometimes you just need to go pro.  I haven't (yet!) replaced a water heater by myself, nor am I comfortable installing exterior doors.  I could figure out how to do these things, but previous bad experiences have taught me to know my limitations.  The challenge for me is to take the time to learn how to repair things myself.  It feels great when I figure something out that saves me money.  

Smarter Frugality: The Little Things That Make a Difference (Part 2)

Often I try to postpone or avoid purchases altogether.  However, there are some areas where I have realized spending money for quality is really the most frugal thing to do.

• I'm sure my tenants think I must work for Filtrete, because my #1 pet peeve is finding a dirty A/C filter  in one of my properties.  I routinely carry new filters with me when I visit my properties.  At home, we always change the filter before it gets very dirty, and we avoid buying the cheap $.99 green filters because they only trap the big stuff.  Trust me, this is an investment you should make.  Dirty air filters make your HVAC system work harder, which will prematurely age the parts that keep it humming.  Besides, breathing cleaner air is better for your health.
• I used to buy cheap K-Mart shoes.  Then I discovered Allen Edmonds.  This has been a recent revelation.  I now have shoes that fit my feet better than ever, and the knowledge that they will last for years.  Those crappy shoes I used to buy for $25 a pair would start wearing down in just a few weeks, and the smell... ugh!  
• I spend quite a bit on dental hygiene.  In my early 20s I was a bit lazy in this area.  A couple of root canals was all it took to realize the importance of taking care of my teeth.  A couple of years ago I bought an oral irrigator, which is one of the best purchases I have ever made.  It attaches to my faucet and streams a jet of water between my teeth.  I think it cost less than $15, but it's worth much more than that to me.  Even after flossing I am surprised at how effective the irrigator is at getting my mouth clean.  I also use a Sonicare toothbrush, a Pentek dental pick, along with one-time use dental flossers that I keep in my car.  
• I stay close to the manufacturer's guidelines for servicing my car.  The Corolla has more than 172,000 miles on her and she still purrs every time I crank her up.  

Even if you are on a tight budget, there are ways to mitigate these costs.  Mystery shopping helps with my oil changes and tire rotations.  I redeem credit card points for Amazon gift cards for my toothbrush heads or for Lowe's gift cards for the A/C filters.  It's smart to know when spending extra money will save you from shelling out huge sums for preventable breakdowns.

Smarter Frugality: The Little Things That Make a Difference (Part 1)

Nothing, no matter how small it seems, should be overlooked by those seeking a simple, more frugal lifestyle.  If you aren't paying attention to what may seem like trivial matters, soon they start to snowball into bigger problems.  For example, there is no such thing as a "small" leak at one of my rental properties.  If water is coming from somewhere it shouldn't, that's an urgent issue that needs to be addressed.

Here are a few examples of "tiny" ways I am frugal:

• I used to throw my so-called dirty clothes in the laundry after wearing them once.  It didn't matter if all I had done was wear an outfit to the mall for a couple hours.  At the end of the day, the outfit went in the hamper.  As a kid, we washed our towels and washcloths after every single use.  Now that I am smarter, I use the same towel several times.  That makes a huge difference in our electric bill, plus the towels last longer.  If I wear a pair of shorts to run a few errands, I change out of them when I return home and will wear them again the next day.  I do wear t-shirts and underwear only once.  I sweat too much to get a second use out of them.
• A couple years ago one of my friends saw me applying my deodorant.  He commented about how much I use.  While I have heard of some misers who can get away without wearing deodorant at all, I still need it.  But, after that comment I began reducing my usage a little at a time.  I find that today I use about 75% less deodorant, and I don't stink.
• About once a month we try to use everything up from the refrigerator before shopping for groceries.  The last few meals get a little interesting, but doing so prevents spoiled food from hiding behind other items.
• I use my bicycle to handle local errands whenever possible.  There's a paved trail that crosses my street.  I can use that to go to the grocery store, the library, and the hardware store, among other places.  I get my exercise in this way, and save wear and tear on my car.

Tomorrow I will look at places where I spend more money than I have to.  Smart frugality, after all, is an investment that should pay dividends over the long haul.

Property Management Blues

Without a doubt, shifting the day to day management of my rental properties is the right thing to do.  Just in the last week I have experienced first hand the perils of trying to do things myself while living 600 miles away.

In the first case, I am dealing with a drug addicted tenant who also is a compulsive liar.  He started getting behind on his rent months ago.  The problem was, until the first of March he was regularly giving me part of the rent.  That, along with lie after lie after lie about what's about to change to get him caught up, convinced me to be lenient.  Since the last week of December I was promised that the tenant's tax refund would be given to me in its entirety to make us square.  That never happened.  This was the first townhouse I selected to hand over to a property management company.  While I have signed all the paperwork to get started, I promised them an empty house before we kick things off.  Unfortunately, my problem tenant isn't budging.  The latest excuses have been about why he has yet to move.  Around the first of April, he was packing everything and promised he would rent a moving truck when he got paid on the 10th.  Then when the 10th came and went, the new landlord had yet to install the toilets in his new place.  Once the fictitious toilets were  installed, my tenant came down with a mysterious illness that kept him bedridden for days.

Last week I filed an unlawful detainer lawsuit at the courthouse.  It sucks that I have to pay $263 to get this thief out of my house.  That's $263, plus more lost rent until he finally decides to get out.

On a lighter second example, one of my tenants wishes to move a few months before her lease ends.  This is a mutually agreed upon move.  My tenant is current with her rent, so I hate to lose her, but I also understand why she must move.  She agreed to help me place my next tenant, so I have been able to show her condo without even being present.  The situation has worked out nicely - my new tenants were able to tour the condo, ask questions of the current tenant, and communicate with me by phone.  I emailed a lease, which they signed, scanned and emailed back.  So far, so good.  They are supposed to make the deposit to my bank account today and pay the first month's rent before the lease takes effect on May 15th.  Hopefully there are no surprises I have overlooked with doing things this way.

I do have a couple of concerns with hiring a property management company for my lower end properties.  First off, with lower end properties, you will rarely find a tenant with flawless credit.  These tenants also tend to live month to month with no emergency funds, so when they lose their job, chances are an eviction will follow shortly.  Because I've been flexible, I've kept vacancies minimal.  A vacant home is a money loser for me.  Will the property management company hold out for several months in search of a tenant with better credit?  The other concern I have with turning over the keys is the loss of control I have over repairs and maintenance.  Perfect example:  I've had one of my higher end properties under professional management since I bought it in 2009.  One of the toilets broke early last year.  The management company was going to charge $250 to replace it.  I paid $68 for a new toilet and replaced it myself.   Will this be a recurring theme when I use a management company for all my properties?